Build additional Units? Downtown Phoenix, AZ

[Drew B.]

Hi all -

I have a triplex that I purchased in 2017 near downtown Phoenix, AZ. It is located in a very popular historic district where SFR has shot up 30-40% in the last few years. Rents are also increasing in the Phoenix Metro area due to dramatic population growth. After some sweat equity, my units are performing very well compared to the relatively cheap 2017 note I hold. However, I can't get out of my head what could be if I built more units on the land. The land had the highest density zoning allowed in the City, so it in theory can hold more units that can realistically fit (after parking spaces), but If I scraped the whole site I think 8-10 infill units could fit comfortably.

Obviously, construction prices have risen dramatically this past year, but so have rents in the City..  Multifamily investors are purchasing units for $225K-$275k per door based on recent comps.  It's getting to the point where the potential cost to build is less than what small multi-family is going for these days.

I am looking for any feedback or advice people may have who are local to Phoenix.  Any help would be much appreciated.

Thank you.